Marketing Managers Must Keep in Mind the Four Ps of Marketing - Coursework Example

Introduction For any organization to run successfully, it needs to be financially viable. Financial viability comes only by the firm’s ability to market its products. All the supporting functions like accounting, operations, administration etc. are immaterial if marketing targets are not met. These targets could be achieved only if the marketing managers address to the needs of the customers broadly keeping in mind the four P’s of marketing viz. Place, Product, Pricing and Promotion and thus carefully monitoring the flow of such goods and services to the customers according to their requirements. Particularly in the case of services marketing, in addition to these 4 P’s it is important to identify the customer needs and service them properly, in short focus on People, Physical presence and Process also, failing which, there would be negative publicity and customer retention would become a big problem. (Mudie. P. & Pirrie. A, 2006). Hence every firm in the service sector needs to develop a Customer retention strategy to maintain in the long run. Customer Retention Strategy in the service context. At the outset, strategies could be formulated only if the nature of services is clearly understood. How services are different: The four unique characters of services are that they are intangible, variable, perishable and inseparable. Hence, these cannot be felt before their purchase, meaning that they have to be produced and consumed simultaneously. Even after receiving a service, due to its technical superiority, the customer can hardly distinguish between a good and a bad service. To avoid this risk, people generally try to buy products which have word of mouth publicity rather than depending on advertised products. This word of mouth publicity can be achieved only through understanding the customer relationship management techniques. Customer Relationship Management techniques are the methods a firm employs to increase the longevity of relation with its customers. Feel good gestures like guests being addressed by names, understanding the needs of sophisticated customers and solving them, differentiating their needs and customizing the services to their needs, maintenance of account information, reducing defection rates in terms of service quality, interaction with customers to build strong relationship, identifying valuable customers and treating them in a special way etc. Additionally, minimum value customer accounts should be carefully monitored that they pay the minimum costs for their account maintenances. All these should be done keeping in view that the organization’s image in terms of customer perception should never be damaged and if any change it should only be positive. This can be possible only if the firm understands the perception of service from the customer’s point of view. Service perception from the customer’s point of view: Based on the past experiences of service rendered by a firm, advertising or word of mouth publicity, the general tendency of any customer is to form an expectation about the service which he would receive while dealing in future. This is the expected service from the customer’s point of view. Depending on this expected service and the costs the customer is likely to pay for such a service, a perception of the service receivable would be formed in the customer’s mind. At the same time, the customer also checks various other alternatives, the costs they include and the benefits they promise for such costs. The customer always tries to maximize his benefits in tandem to his costs and as such approaches the best alternative as perceived by him. Hence Customer perceived value in service includes a multitude of functional, economic and psychological benefits. Of the three, successful marketer tries to maximize the psychological benefits that when the customer tries to rationalize between the costs paid and benefits accrued due to those costs, the psychological benefits play a major role in forming satisfied decisions towards the firm. In this way, if the perceived value exceeds the customer’s expected service value then, customers are bound to return in future. Mathematically, it can be represented as follows: Satisfaction = Perception – Expectation. (Mudie. P. & Pirrie. A, 2006). For maximizing emotional benefits of the customer, it is essential that the marketer designs his service before-hand and communicates this model to his customer with clarity before entering into a service contract. Designing a Service: While designing a service importance has to be given to the facts like presenting a realistic picture of service to the customer, performing the right service the first time, communicating effectively with the customers, giving pleasant surprises to the customers during the process, every problem discussed by the customer to be taken as an opportunity to impress them, and continuous evaluation of the firm’s performance against the customer’s expectations. Service designs can be self-service oriented, customer-staff reciprocities service design, front and back office interactive service design and only back office involved service design ( Mudie & Pirrie, 2006). Keeping all this in mind, point to point customization of the customer’s request on phone, online or during interactive responses should be performed so that there is no chance of mistakes being performed during the process. If such error free service experience is delivered, the customer is confident about the commitment of the firm towards their service orientation. Service Experience: As already pointed out, service experience should be almost error free for which gaps between the management’s perception and customer’s expectation, gaps between the management’s perception and the service quality specification, gaps between the service delivered and specified earlier, gaps between the service communicated and the service delivered and the gap between the service perceived and expected should be eliminated. If such gaps are eliminated to the maximum extent then the service delivered would be responsive, reliable, and empathetic and assured of good quality service delivery to the customer. Even after filling all these gaps, it’s quite possible that some customers tend to be over smart and extract more than deliverable services. Though avoiding such customers could be possible, in this competitive era, maintaining good relationships with such customers would be even more rewarding. Maintaining good customer relationship: This is possible only by developing a core strategy depending on the customers with whom the company deals with, maintaining high standards and the top-management’s commitment to continue and even improve in the future, introducing self-service oriented technologies and periodical monitoring of such services provided to the customers to ensure perfect satisfaction from the customer’s side. Other than these, small percentage of errors which are expressed by only 5% of the customers of the total customers dissatisfied should not be overseen. Care should be taken to resolve such complaints in a speedy manner because bad publicity spreads faster than good publicity. In this context, it should be remembered that any complaint is like a gift if it is handled carefully. Such careful handling of complaints should be performed by the employees itself who, if not commended when answering complaints satisfactorily, by the company, would not listen to any complaints and only embark on securing new accounts for meager commissions etc. Hence, along with customers, even the employees should be treated properly by the management for satisfactory managing of services. The main three critical issues in managing issues are explained in the model below. Critical issues in managing services: Firm Internal Marketing Exte External Marketing Employees Interactive Marketing Customers Internal Marketing refers to the processes in regard to the training, motivating and rewarding of the services as offered by the employee to remain in the firm. The culture of the organization plays a major role in formulating these parameters. Interactive Marketing refers to the various services offered by the employees to the customers during the three phases of initial contact with them, during the sale of service and post sale service to maintain the image quality of the firm. External Marketing refers to the efforts as put in by the firm to convince the customer to be attracted towards the firm. These include advertisements, brochures, website information, Sale methodologies and mass communications. Service blueprinting forms a major part of communication of the services offered by the firm to the customer that he can understand and identify how the firm can cater to his needs. ( Guzzoni. M, 2005). By addressing to the above said issues, customer retention and service recovery becomes easier for any firm. In other words, satisfying the customers is the only key to customer retention. However, even after taking enormous care, complaints do come and it is at that time, service recovery plays a major role. Studies suggest that actually, if the error-free performance is increased from 80% levels to 90% levels, customers would almost be doubled immediately. The remaining 10% of complaints which are lower in number could be answered in a better manner of which 50% i.e. 5% of the total customers would be recovered through better complaint handling (Mudie & Pirrie, 2006). Thus services marketing process has to be handled for any organization for it to be financially viable. This model can be more clearly understood if studied in light of an organization namely: David Lloyd Gymnasium (DLG). With around 78 gyms in U.K. and 10 situated in Europe, DLG is one of the most famous organizations offering health services to the people living in those places. These services are mainly dependent on the personal interaction of the gym employees with the customers and as such successful process implementation on the lines of the managing issues triangle viz. internal, external and interactive marketing plays a vital role in retaining and forming new customers. A service blueprint of the DLG can be designed as follows: David Lloyd Gymnasium U.K. (No. 78) Europe (No. 10) Fitness Centers A-1 A-2 A-3 A-4 Specialist Sports Shop Crèches B-1 B-2 B-3 (Contd.) Health and Beauty Spas C-1 C-2 C-3 C-4 Club Lounges with Free internet Access – D-1 A-1 = Aerobics, A-2 = Boxing, A-3 = Tennis, A-4 = Swimming Pools. B-1 = Baby Care, B-2 = Play School, B-3 = Sports Club for Kids. C-1 = Sauna, C-2 = Steam Bath, C-3 = Jacuzzis, C-4 = Hair and Beauty Saloon D-1 = State of the services and facilities. An Approach to Customer Retention in Gymnasiums/ Health Centers: In order to retain and attract new customers, DLG has developed the following benefits for its customers: A large chain of health centers of 78 in U.K. and 10 in Europe so that one or the center is nearest to every possible customer. The facilities like 12,500 exercise machines, 10,000 activities which programmed every week, more than 750 fitness experts, 350 tennis professionals and free internet access in the club lounges boasts of the ultra modern facilities DLG is offering to its customers for membership. A 7-day trial period membership at reduced rates is also available at DLG so that the customers first experience what it is at that place and only when they are satisfied, they could continue their relationship with it. Naturally, here, only if the customer’s perceived value is more than what his expected value was about DLG will he join the gym. A 4,50,000 customers maintenance at this juncture speaks about the success of the organization in exceeding the customers expected service standards. Other than this, there are also facilities like fitness experts advising their clients according to their personal requirements, recipes which could be cooked for following a reduced calorie diet to ensure that the customers can maintain good health through the most effective methods. For better advertising, DLG sponsors Britain’s top tennis player – Andy Murray. A critical area in the customer retention of DLG is the cost of the membership which it charges for obtaining the membership in its club. A 7-day trial period for an adult costs £15 while it costs £5 per child implying on an average, it costs around £60 per month for an adult and £20 per child which is very costly in terms of the other gymnasium services. These membership facilities are available both on corporate and family grounds. While companies like Books, RWE n power, Marks and Spencers, John Lewis, Nationwide etc. have gone in for corporate memberships, financing for such a costly gym for a family would be hectic that too in this turbulent times. Although the club offers state of the art facilities, financing for such facilities would not be viable if it does not attract more customers because of its high charges. Of the three generic strategies which an organization needs to follow to achieve financial success – viz. Focus, Competitive Advantage and Cost Leadership. (Porter, 1990). DLG is quite focused in its health and fitness programs that it advertises around 10,000 of them on a weekly basis and that too in places in and around almost everywhere in U.K. Its competitive advantage is in developing the best fitness ever available in the areas where it is placed. Not only that, it has also concentrated in complementing other services to these fitness programs like setting up shops, creating recipes, developing spas, saloons and crèches so that any person who visits this place is almost relaxed that all his personal fitness and family problems are taken of and he can exercise in the most relaxed way. In this way, it has differentiated and branded its services to the niche customers. However, today’s customers are quite smart enough that they try to balance the cost involved in such service receptions and only if they find it worth considering would they go in for a membership. Supposing that a person first enrolls himself for the 7 day trial period in the DLG, and then during this time, he tries to observe the following issues in the gymnasium: The reliability of the fitness programs as advertised by the organization. The frequency of failure of fitness machines in the gymnasium. The receptive quality of the training staff – whether they are addressing his requirements or only going on emphasizing their own programs without listening to his difficulties. The waiting time for using the fitness machines – This happens when too many people are enrolled for the same time. Usually, more customers come up in the early morning so that they can leave to their work place after a relaxed work out. However, if too many customers turn up at the same time, the gym should take the necessary steps to avoid over-waiting for any customer because this causes frustration in the morning itself. Secondly, when corporate memberships are allowed along with families, it’s quite natural that the fitness experts exhibit a difference in attitude towards the professionals and the families. At some places while the professionals are given more importance owing to their stature, some places give more importance to the families as they directly pay to the gymnasium. This differentiating attitude in service can cause severe fall in the customer numbers. The out-of-pocket costs which the members may have to expend after taking a membership to fulfill the requirements of the fitness program. For example, a member who joins for the racquets will have to purchase tennis bat, balls, required clothing, shoes and socks on the minimum front. The cost of all these accessories is also taken into consideration before going for membership. After observing all these costs and services received, the customer tries to examine a ratio of V1 (Cost of the Value) and V2 (Value received in return for that cost). If V1 exceeds V2, then, the customer goes to look into other alternative gymnasium and vice versa. For this reason, the management should always be in the run to offer something more than what it charges for its members in the most competitively economic way. One more important thing is the word of mouth publicity of the gymnasium wherein would be customers approach the already enrolled members and find out the service quality in the gym. This point needs to be addressed to constantly and remember that not only prospective customers but also existing customers should be treated with utmost importance so that they give good opinion of the service offered. Moreover, slight differentiation could be made between customers who spend more for the gym services and those who settle for the minimum services by paying less so that customers would be encouraged to register for better services. But, care should be taken in this context that the minimum paying customers should never be ill treated lest, it would result in bad publicity of the organization. Conclusion: It has been observed that services are intangible in nature and for them to be financially viable, the customer should perceive the quality of the service rendered as greater than the cost for such services. David Lloyd Gymnasium which provides the best facilities to its members has been quite focusing in its efforts and as such could differentiate its services from the other smaller gyms. It is also quite successful in resolving the issues of managing such services. However, it should concentrate on cost leadership that its members understand that they receive greater services in comparison to the cost they pay for availing such services. Book References: Guzzoni M.L. (2005. Internal Marketing, Interactive Marketing and External Marketing. Models of Service Marketing. Lund. Institute of Business Administration. Pg. 24-45. Mudie. P. & Pirrie. A. (2006). Service Recovery. Services Marketing Management. Great Britain. Butterworth Heinemann Publications. Pgs. 6, 47,48, 254-260. Porter. M. (1980). Generic Competitive Strategies. Competitive Strategy. New York. Free Press. Pg. 35. Book Bibliography: Kotler. P. & Keller. K. (2006). Designing and Managing Services. Marketing Management. New Delhi. Dorling Kindersley (India) Pvt. Ltd. Pgs. 133, 144, 371 - 395. Internet References: Anonymous. (2009). David Lloyd. U.K. Available from: http://www.davidlloyd.co.uk/home/aboutdavidlloyd Last Accessed: 24th March, 2009. Read More